What’s so fascinating about them?
Even millennials themselves are getting tired of this 'millennial' trend.
But the truth is that those born between 1980 and 2000 are nowadays the largest adult segment in the world. And most businesses should be thinking about them (including yours).
Why should Wealth Managers focus on millennials?
There are two main reasons.
- Millennials are already creating wealth. By 2030, they are expected to control over $20T of assets globally.
- The baby boomers (those born between 1946 and 1965) are about to enter retirement age. That means that, by 2050, we will live what they're calling the Great Wealth Transfer. Millennials parents are expected to pass down another $30T (some say almost $59T). These figures are just an estimation, of course. Perhaps baby boomers won't be so keen to leave all that money to their families, and they’ll prefer to spend it during their retirement years. Be that as it may, a wealth transfer is going to happen.
So that’s something we know for sure: Assets are changing hands, and the new owners are completely different from the previous ones.
Today, we are going to analyze the main changes that millennials are bringing to the financial industry - and what you should be doing to adapt.
How are millennials different
According to a study conducted by Deloitte, 75% of millennials would switch their private bank if they found a better option. However, what's a 'better option' for the millennial generation?
Let's analyze what millennials are known for:
- They're tech-savvy: That's definitely something to keep in mind. 54% of them would move to a different firm if they were offered a better technology platform. They actually give technology for granted. But beware: That doesn't mean that they're past the human touch and that they don’t want a personalized service.
- They expect more from companies: They're more world-conscious, they care about Environmental, Social and Governance (ESG), and want to work with a company that cares as much as they do.
- They value relationships: Relationships understood in the broadest sense. They value relationships with the companies they frequent; also, they are very influenced by recommendations (from family members, friends or social media).
- They don’t like risk so much: After living a financial crisis, they don’t trust financial firms like their predecessors used to do. They’re more serious savers and want to have control over their investments.
However, when we talk about innovation the first thing that usually comes to mind is technology.
Millennials are tech-savvy. So we’re giving them tech
Millennials have a taste for technology (that shouldn’t surprise you by now!)
- Almost 90% of them check their smartphone within the first 15 minutes after waking up.
- They envision a sharing-based, cashless society. In fact, 33% of them think they won’t even need a bank.
They don’t see technology and innovation as a nice extra. Technology is a must for them, whether they’re choosing a wealth management firm or an airline for their next trip.
This is forcing many Wealth Management firms to invest in technological platforms at a fast pace if they don’t want to be left behind. (And technology is a wide thing - take a look at the main trends in wealth management innovation).
If you’d like us to be more specific, you should take a look at the information gathered in a study conducted by Accenture. Millennials and other generations were asked about what they wanted to find in the ‘digital mix’ of a Wealth Management firm. And they came up with the following:
- Robo advisors: 67% find computer-generated recommendations as key. Not too sure about what these are? Take a look at our article explaining what’s a robo advisor.
- Self-directed investment portal: 66% of the millennials that participated in the study want to have access to this kind of platform.
- Gamification: 65% think gamification will help them learn more about investing and be more engaged with their portfolio.
- Mobile platform: Mobile is one of the main trends worldwide, and not just in Wealth Management. 63% of millennials concluded that they wanted access to a mobile platform that connects them to advisors.
- Social media: 62% stated that they’d like to have a platform that shows social media and sentiment indices, so they could do better choices with their investments.
- Tracking software: 67% of millennials wanted access to this functionality. A software that enables tracking of their transactions, payments and different financial data. All of it, in real time. This kind of software is very useful to provide recommendations
Technology is not everything
Technology is the first thing that comes to mind, but that’s not the only concern millennials have. They want to work with companies that care about ESG or that give them control over their investments.
How is the financial sector approaching these issues?
Different companies and entrepreneurs identified these needs several years ago. Thus, fintech firms like these were created:
This company’s roots are in analytics for ESG investing. They use their technology to help Asset Management firms easily synthesize and analyze alternative data in order to derive insights.
Artificial Intelligence and Big Data are the hows behind this company, and the results are data-driven companies with access to real-time insights, that are able to offer their clients (millennials included) the perfect investment options.
Millennials have this thing with being in control. After experiencing an economic crisis in their early professional years, they do not trust banks as their predecessors used to do.
They want to have control, and they want quick access to information about their investments. That’s the reason why fintech companies such as Grove were born.
Grove promises to have “reinvented” financial planning.
These are just some examples, but innovation is coming in all shapes and sizes. And big corporations should be on the lookout.
What some corporations are doing to keep up to date
So - You shouldn’t panic, but there are many things going out of there. At Plug and Play we try to make things easier for firms, by ‘matching’ them with cutting-edge fintech startups that fulfill their needs.
Many Wealth Management firms have discovered that collaborating with startups is much more helpful than competing with them. However, finding the right startup is not easy at all, as some corporations have noticed by now.
That’s why some Financial Institutions have already joined Plug and Play’s innovation platform, so they can join forces with fintech startups, collaborate and grow together.
Innovation in Wealth Management is finally happening. Don’t be left behind.
At Plug and Play's Fintech accelerator we are in touch with corporations and startups that are changing the world as we know it. Join our platform today.